Avoiding IFA fees on DC pension transfer

Reluctantpensioner

I have a significant sum deferred in a inactive pension scheme.
I want to transfer it to my Fidelity SIPP.
This is from a self managed pension to a self managed pension, I have been managing it for 17 years. I should not have to pay a massive fee. Free from exit fees was an integral claim of the scheme.

Here is the wording I am fighting with:
"In line with the requirements introduced in the Pension Schemes Act 2015, I confirm that if the
cash equivalent value of my main Plan benefits is more than £30,000.00, I have taken
appropriate independent advice from a financial adviser registered by the Financial Conduct
Authority before deciding to transfer my main Plan benefits*.

*Note: This does not apply if:
The benefits to be provided under the receiving pension plan are not ‘flexible benefits’ (e.g.
defined contribution and cash balance benefits) for the purposes of the Pension Schemes
Act 2015 and you provide adequate confirmation that the benefits to be provided are
“safeguarded benefits” (e.g. defined benefit or career average benefits) or
You are transferring only the value of your ‘flexible benefits’ AVCs. "
This wording, with its double negatives, is incomprehensible. I understood DC to DC was advice free. This seems to say you can only transfer to purchase an annuity.

In case it matters the funds are described as: Post 97 benefits c. 92% and AVC the rest.

Malthusian

Are you only "transferring only the value of your !!!8216;flexible benefits!!!8217; AVCs" or are you trying to transfer a defined benefit plan?

The wording suggests that there is at least a defined benefit scheme attached to this.

Reluctantpensioner

This is defined contribution (money purchase) only.
The scheme managers probably have clients with the same employer, with DB, but I am not one of them.
Yes, I want 100%, not 8%.

Linton

The wording you give is certainly bad since it is of the form: This does not apply if A and B or C.

A - The receiving pension benefits are not "flexible
B - The benefits being provided are safeguarded
C - You are only transfering flexible benefits.

If you read it as meaning (A AND OR C rather than A AND (B OR C) it would seem to satisfy your situation since you are transfering flexible benefits.

sandsy

Tell us more about the post 97 benefits? That terminology is usually associated with increases on guaranteed benefits.

Tcquins

Most likely means your pension has safeguarded benefits worth over £30000.

This includes GMP and/or GARS (guaranteed annuity rates). Hence why you require independent financial advice as you would lose these valuable benefits on transfer.

Linton

On the other hand the OP says the money is already in a self managed pension. So we need confirmation as to what "Post-97 benefits" actually means.

Simple_Man

Reluctantpensioner wrote: »

I have a significant sum deferred in a inactive pension scheme.
I want to transfer it to my Fidelity SIPP.
This is from a self managed pension to a self managed pension, I have been managing it for 17 years. I should not have to pay a massive fee. Free from exit fees was an integral claim of the scheme.

Here is the wording I am fighting with:
"In line with the requirements introduced in the Pension Schemes Act 2015, I confirm that if the
cash equivalent value of my main Plan benefits is more than £30,000.00, I have taken
appropriate independent advice from a financial adviser registered by the Financial Conduct
Authority before deciding to transfer my main Plan benefits*.

*Note: This does not apply if:
The benefits to be provided under the receiving pension plan are not ‘flexible benefits’ (e.g.
defined contribution and cash balance benefits) for the purposes of the Pension Schemes
Act 2015 and you provide adequate confirmation that the benefits to be provided are
“safeguarded benefits” (e.g. defined benefit or career average benefits) or
You are transferring only the value of your ‘flexible benefits’ AVCs. "
This wording, with its double negatives, is incomprehensible. I understood DC to DC was advice free. This seems to say you can only transfer to purchase an annuity.

In case it matters the funds are described as: Post 97 benefits c. 92% and AVC the rest.

I agree the double negative is a bit puzzling but it makes sense when I compare it with my instructions for my DC plan:
'...unless you tell us otherwise we will assume that the reason for the transfer is to obtain flexible benefits...'
hence they are saying the adviser step can be waived if you AREN'T seeking flexible benefits, and you maintain any safeguarded benefits.

xylophone

In case it matters the funds are described as: Post 97 benefits c. 92% and AVC the rest.

This is very odd if you are saying that the pension in question is definitely money purchase and not DB/hybrid.

In DB pension schemes, there was a requirement pre 1997 to pay a Guaranteed Minimum Pension.

Post 1997 benefits had to satisfy the "Scheme Reference Test".

It was (and is) common in DB schemes to offer the members the opportunity of making AVCs.

You advise that the pension in question is a simple money purchase (DC) arrangement.

It seems to me that the administrator of the pension is under the impression that you are a deferred member of a DB or possibly a hybrid scheme and is asking you to confirm that

The benefits to be provided under the receiving pension plan are safeguarded benefits for the purposes of the Pension Schemes Act 2015 and you are providing adequate confirmation of this fact


or that

You are transferring only the value of your ‘flexible benefits’ AVCs.

Clearly the SIPP (the 'receiving plan" will not provide "safeguarded benefits".

You need to contact the administrator of the scheme and clarify that the pension you wish to transfer is a pure DC scheme?

Reluctantpensioner

OP:
Thanks for trying to help. I'm encouraged that some of you find the wording as confusing as I do.
There is definitely no DB in this pension; I joined in 1999 and they had dropped DB and With-Profits from the scheme.
There are no guarantees that I am aware of. It has always been presented as: here are the funds available, chose which you want to invest into?

dunstonh

hanks for trying to help. I'm encouraged that some of you find the wording as confusing as I do.

Its not that we are finding the wording an issue. Its that we dont have the data available to us to understand that context.

For example, the mention of 1997 rights does suggest there is safeguarded benefits.

It could be a section 32 buy out bond (or hybrid which is now classified as one) with GMP. GMP is a safeguarded benefit.